Adjustable Rate Mortgages (ARM) – 5/1, 7/1

The monthly principal and interest payments are fixed for the initial loan term (5 or 7 years).

When the fixed-rate period ends and the loan begins to adjust, your payments will reflect the current rates, which might be lower or higher.

ARMs have limits (caps) as to how much the rate can change in the variable period: Cannot go up or down more than 5% in the first year the rate adjusts, more than 2% each subsequent year, and cannot go up or down more than 5% over the life of the loan.

Both ARMs are amortized over 30 years.

Borrow up to 80% of home value.

No prepayment penalties.

You don't plan on staying in your home for more than 5-7 years.

You would prefer a lower rate and monthly payments in the next 5-7 years and accept that your rate will vary after that period.

You want to build more equity in the next 5-7 years by making additional principal payments using the money you could save from having a lower interest rate.

Not all loan products or terms are available in all states. Normal credit qualifications and other terms and conditions apply. This does not represent an offer to enter a loan agreement. Loans subject to credit approval. Products, rates and terms subject to change without notice. Prepayment penalties do not apply.

Capital One, N.A., will pay closing costs up to $1,000. Certain restrictions apply. Promotion may not be used towards points, per diem interest or tax-deductible fees, such as property taxes and private mortgage insurance (PMI). Any portion of the promotional amount not used towards closing costs will be forfeited. Promotion may be limited by investor/insurer guidelines for each loan type. Advertised discount not available on home equity loans or home equity lines of credit. This offer is non-transferable and cannot be combined with any other offer.

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Based on June 2014 Bankrate survey of closing costs on purchase mortgages

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) requires all mortgage loan originators to be registered in the Nationwide Mortgage Licensing System and Registry (NMLS). Mortgage loan originators and their NMLS IDs can be looked up at http://www.nmlsconsumeraccess.org/.